The effects of constrained mobile coupons in the mobile channel |
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Institution: | 1. Department of Finance, Insurance and Real Estate, University of Memphis, 3675 Central Avenue, Memphis, TN, 38152, USA;2. Department of Finance and Business Law, University of Wisconsin Whitewater, 800 Main Street, Whitewater, WI, 53190, USA |
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Abstract: | Despite the popularity of constrained mobile coupons in recent years, little research has examined their effectiveness. This paper presents a hidden Markov model (HMM) framework to examine the short-term and long-term effectiveness of minimum-threshold coupons (i.e., threshold-constrained coupons) and limited-time, low-price coupons (i.e., time-constrained coupons). We find that both of them boost consumers' purchase probability during the coupon redemption period. Furthermore, minimum-threshold coupons not only increase consumers’ purchase quantity during the redemption period, but also improve the customer-firm relationship beyond the redemption period. By contrast, limited-time, low-price coupons strengthen the customer-firm relationship only for consumers in a higher relationship state but not a lower relationship state. This study can help marketers allocate limited marketing resources effectively, strengthen and manage the relationship between consumers and firms, and increase product sales. |
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Keywords: | Mobile coupons Relationship state Hidden Markov model |
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